VVF, a leading Indian contract manufacturer of soaps, has put in place a plan to grow its business after a financial restructuring early this year. This involves growing its branded business, setting up new projects in Russia and Indonesia and scouting for joint venture partners in Africa.
According to Rashmin Joshi, whole-time director, the extension of the Rs 150-crore branded business will commence in the next few months. VVF has already launched a hand-wash variant of its anti-septic soap Bactershield in the month of April. By September, a hair colour under the Jo brand name will be launched. More extensions are likely in the months ahead, he says.
VVF has three soap brands at the moment, namely, Jo, Doy and Bactershield. It also has a hair oil called Mahabringol, which was acquired from Henkel India last year.
Last month, the company offloaded two brands — Aramusk and Moloy — as part of its restructuring efforts. These brands were also acquired from Henkel last year in addition to a manufacturing unit located in Kolkata.
Work on the new projects, in contrast, especially in Russia is yet to begin.
For the Indonesian project, on the other hand, the company has acquired the land, Joshi says. It is in the process of tying up the funds for the project.
"The Indonesian project will be a plant devoted to manufacturing oleochemicals, while the Russian facility will focus on personal care," he says.
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VVF currently has four plants in India and six facilities abroad. Of the overseas units, three plants — two in the US and one in Poland — were acquired over the last two or three years for close to Rs 100 crore. Much of this was acquired with the help of debt.
This apart, loans taken for expansion purposes in India as well as for working capital requirements resulted in the firm piling up debt of close to Rs 768.19 crore on its books as of March ending 2010. Of this, secured loans constituted Rs 706.56 crore, while unsecured loans made up the rest. Of the secured loans, short-term debt alone stood at Rs 316.1 crore, while long-term debt stood at Rs 390.46 crore.
Joshi says the firm has since then cleared short-term loans to the tune of Rs 120 crore. An additional tranche of short-terms loans to the tune of Rs 150 crore has been converted to long-term debt, he says. This was part of the rejig exercise initiated earlier this year.
The Rs 1,755-crore firm is also looking at equity infusion to support its growth plans. "That is an option we are exploring. Funds could be infused by the promoters or private equity," he says.
The firm is also scouting for joint venture partners to push its contract manufacturing business in Africa. While over 60 per cent of VVF business constitutes oleochemicals, the balance 40 per cent consists of both contract manufacturing and brands.